What Little Tommy Could Have Told Big Johnny About Deficits and Debts

The Fox Business Network will include John Kasich in its Thursday evening prime time debate. Low polling nationally and in every state except one, New Hampshire, the term-limited Ohio leader will have a final chance before voting starts there on Feb. 9 to show he’s got the right stuff. That is, if he isn’t sent to the showers by failing to win, place or show.

For reporters who have covered him back home in Ohio, from his run for governor in 2010 until the present, Mr. Kasich rarely lets an opportunity to use children as props go untapped. Camped out in New Hampshire, where he’s waging his second run for the White House, Mr. Kasich regularly runs his big, shiny bus over Granite State highways from one town hall meeting to another.

Tommy Can You Hear Me?

At one recent event, he used a little boy to make one of his regular but false and easily debunked points about today’s debt burden falling on future generations.

In Hudson, NH, at a Veterans of Foreign Wars post, Mr. Kasich engaged in another audience interaction event that, depending on the state and the audience, have previously earned him biting headlines for either running over someone who asked a question or being so flippant as to turn them off. His self-righteousness helps explain why he’s been the least liked of the stable of GOP candidates until recently when that ignominious honor was won by Jeb! Bush.

Kasich is naturally quirky, but the method to his quirkiness hews closely to well-established Republican dogma, from balanced budget to boosting military spending to dismembering Washington and shipping its parts back to states.

It came as no surprise when a very young child, Tommy, was used as a prop to make one of his misplaced concern about future debt and who will pay it. Eli Okun, a Union Leader newspaper reporter who covered the town hall, described Kasich’s encounter with Tommy as having “fun with the crowd.”

The politician turned showman—who spent years hosting a political talk show on the Fox News Channel while pulling down big bucks working for Lehman Brothers on Wall Street at the same time—took the hand of two-year-old Tommy and brought him to the center of the room. There, Okun reported, “…they stood before a large clock showing the national debt ticking upward in real time.”

“Thanks for paying that,” Gov. Kasich said to little Tommy. “It’s not fair that we’re ringing up bills for Tommy to pay,” the crusty state executive told an amused audience.

Too bad little Tommy wasn’t prepared for his sudden encounter with Gov. Kasich, because if he had been, he could have schooled the former Chairman of the House Budget Committee on stuff he should already know. Some fast facts about debts and deficits could have turned Tommy into a child star.

Major Tommy To Kasich Ground Control

Tommy could have informed the 63-year old that Kasich’s debt clock tick-tocking north of $18 trillion looks terrible but it’s really not, if that big number is put in perspective and context. Telling Tommy “thanks” for paying the debt is another shameless example of Republicans trying to get young people angry at their parents and grandparents, as Dean Baker at the Center for Economic Policy Research [CEPR] aptly puts it, “so that they are not bothered by the enormous upward redistribution of income taking place in this country.”

Gov. Kasich’s $18 trillion number is scary until one understands that interest rates are at their lowest level in more than half a century. Thirty-year mortgage rates, the break and butter of middle class life, are still about four percent today and were mostly in the six percent range at the end of the 1990s, when Kasich took credit for President Clinton’s budget surpluses that poised to pay off the debt.

Tommy isn’t old enough to buy a car or go to college or have his own credit card, but if he were, interest rates on car loans, student loan debt, and credit card debt are lower today than they were 20 years ago.

The two-year old could have blamed a Kasich buddy, President George W. Bush, for a war of political convenience that has already cost us all about $6 trillion and counting. He could have blamed President Bush for trillions in income tax giveaways paid for with the national debt credit card. He could have blamed Mr. Kasich for the subprime mortgage meltdown that Republicans put in play that tanked the nation and led to severe economic troubles around the world. Tommy could have pointed to Kasich’s clock and said the $18 trillion figure would be far, far less had Republican policies, of the kind Gov. Kasich is wed to despite having yet to prove themselves effective in real time, instead been converted to investments in all those areas GOPers like John Kasich don’t like. He could have asked the former budget committee chair why raising the income cap for paying into Social Security isn’t on Mr. Kasich’s radar when, in fact, it’s the smartest, simplest way to guarantee Social Security is sold so little Tommy can grow old knowing it will be there for him when he retires?

How about inflation, Tommy, isn’t it raging because the debt is $18 trillion? Absolutely not, in fact, the Federal Reserve Board [FRB] has been working hard to raise the inflation rate back towards its 2.0 percent target. But the FRB’s job isn’t just to keep inflation in check, it’s also to keep workers working. Tommy could have asked Gov. Kasich why Ohio can’t even meet the national job creation average going on three straight years, if Mr. Kasich’s economic razzle dazzle really works?

Tommy doesn’t know it, and reporters certainly don’t, but John Kasich has the most bonded debt of any governor in the nation, mountains he’s accumulated through JobsOhio and the Ohio Turnpike Commission. So squawking about the sky falling from debt when he’s added to it seems double-talk at best. Kasich said he learned how business worked while working at Lehman Brothers on Wall Street. It’s well known that Lehman loved “leverage,” you know, borrowing money from someone else, which made it an easy pushover into bankruptcy when the Great Recession hit, people wanted their money back and Lehman couldn’t deliver. Kasich “Lehmanized” the State of Ohio when that opportunity would never have been given a second thought at any time before 2010, when Mr. Kasich won and was gifted a very Republican legislature that bought into his ideas for privatization of formerly public agency operations.

Isn’t that debt figure the result of paying enormous amounts to meet the interest burden? Tommy could have said that current interest costs, net of payments from the Federal Reserve Board, come to less than one percent of GDP. Back in the 1990s, when John Kasich was a congressman, the interest burden was more than three percent of GDP, demonstrating what the lower interest rates of today can do. Try as he might, Mr. Kasich would likely have a hard time showing Tommy or his father the terrible economic impact of the debt.

Gov. Kasich’s strategy has been to portray himself as the “adult” in the room, but that’s a tall tale when the other Republicans he’s competing with regularly go off the rails. So-called serious people like Mr. Kasich have beat the debt horse to death for decades. He and his ilk have purposely raised fears over the debt to prevent spending that would both help boost the economy back to full employment and meet the nation’s needs in areas like education, infrastructure, research and development and acting on global warming.

A lesson for Tommy is not to blame his parent’s generation. Tommy could blame Mr. Kasich for voting for all of President Ronald Reagan’s budgets that tripled the debt in a cold war spending spree with Russia. Tommy could have pushed back on the idea that generational issues can be measured by government indebtedness and taxation. Tommy will get wealthier over his lifetime through technology advances, and will become better educated and have a better and more advanced infrastructure and capital stock if President Kasich doesn’t shortchange him on these very issues. Tommy’s future will depend on the kind of economy and society he inherits. The tax burden associated with government debt or even the cost of Social Security and Medicare benefits is a very small part of the picture, as Mr. Baker at CEPR points out.

If Tommy’s parents are unemployed or living in poverty because leaders like John Kasich won’t spend money to help them with good jobs, that’s a huge issue of generational equity that helped create the inequality the governor never includes in his town hall meeting. Inadequate spending on infrastructure and education, two key areas Republicans continue to cut, also worsen Tommy’s future. Greenhouse gas emissions, a topic the governor is totally uncomfortable with, is a big deal for Tommy who will live his life in a hotter future with all the attendant consequences that will require government to step up to the plate. Mr. Kasich never factors these factors into his national debt speech.

Gov. Kasich is known as a numbers guy, a good manager, but he still doesn’t understand that tax dollars are only one way in which the government pays for things. Another way is through government granted monopolies like patents and copyrights. “These monopolies raise the cost of everything from drugs and medical equipment to seeds and recorded music by many hundreds of billions of dollars above the free market price,” Baker rightly notes.

During a visit this summer, John Kasich told one audience to “get over” the fact that they will probably have to work longer and get less when they do retire. This comes after Congressman Kasich voted for the 1983 Social Security deal between the Reagan White House and Democratic House Leader Tip O’Neil. Over 30 years ago, Kasich the congressman did the right thing for Tommy’s parents. Now, he wants to do the wrong thing for little Tommy who, if he can find a good paying job or two, or three, or four or five, will have to slug away until he’s 70 years old or more and get a cut in retirement benefits, thanks to the mercurial governor who likes to be both a moving target and on two or more sides of an issue.